Dairy price roller coaster ride continues

Columnist Lee Mielke wraps up the week’s dairy industry news.

By Lee Mielke

For the Capital Press

Published on February 27, 2018 11:37AM

Last changed on February 27, 2018 11:55AM

Lee Mielke

Lee Mielke


The cash cheese market lost ground in the President’s Day-holiday shortened week. Cheddar block cheese inched up to $1.55 per pound Wednesday, only to shrink back and close Friday at $1.4950, down 4 1/2-cents on the week and 8 cents below a year ago.

The barrels finished at $1.46, down 2 cents on the week and 5 3/4-cents below a year ago. Only three cars of block were sold last week at the CME and 31 of barrel.

The blocks regained 3 cents Monday and added a half-cent Tuesday, climbing to $1.53. The barrels were up a penny Monday and stayed there Tuesday, at $1.47, 6 cents below the blocks.

Dairy Market News reports that milk continues to flow into Midwest cheese vats and at a discount. Cheese sales are steady to higher.

Western cheese output is in line with current milk volumes but plants are reviewing schedules to avoid further accumulation.

“The U.S. cheese market seems to be competitive compared to the rest of the world,” says DMN. Domestic sales are flat but some contacts report interest from the international market has increased some, due to higher cheese prices in the European Union and Oceania.

In another week of heavy trading, cash butter climbed to $2.19 per pound last Wednesday but closed Friday at $2.1725, up 7 1/4-cents on the week and 4 1/4-cents above a year ago. There were 44 cars sold last week, down from 72 the week before.

The butter jumped 5 1/4-cents Monday, with 10 sales, then dropped 4 1/4-cents Tuesday, to $2.1825, on 27 cars unloaded.

Cream supplies are tightening for butter in the Central region and butter makers suggest increased Class II production is beginning to cut into the recent accessibility of cream.

Western butter makers report that higher prices in some international markets “may offer more export opportunities for U.S. butter, or at least hinder large volumes of imports.” Domestic retail orders for the spring holidays are reported to be strong and building but cream supplies are abundant.

Grade A nonfat dry milk saw a Friday close at 67 1/4-cents per pound, down 3 1/4-cents on the week and 15 cents below a year ago.

Monday’s powder was up three-quarters but gave it back Tuesday.


January milk up


The Agriculture Department projects U.S. milk output to hit 218.7 billion pounds in 2018 and January output was off to a good start to achieve that. Production hit a higher than expected 17.3 billion pounds in the top 23 states, according to preliminary data, up a bearish 1.8 percent from January 2017 and the 49th consecutive month output exceeded the year before. The 50-state total, at 18.45 billion pounds, was also up 1.8 percent. Revisions raised the December 23-state estimate 4 million pounds to 16.98 billion, up 1.1 percent from a year ago.

January milk cow numbers totaled 8.74 million head in the 23 states, up 4,000 from December and 49,000 more than a year ago. The 50-state total, at 9.4 million head, was up 5,000 from December and 46,000 above a year ago. Output per cow averaged 1,979 pounds in the 23 states, up 24 pounds.

California roared and topped its year ago output for the first time in 13 months, up an impressive 2.2 percent from 2017, thanks to a 60-pound increase per cow more than offsetting a drop of 16,000 cows. Wisconsin was up just 0.4 percent, on a 15 pound gain per cow offsetting 5,000 fewer cows.

Idaho was up 2.1 percent, on a 35-pound increase per cow and 2,000 more cows. New York was down 3.3 percent on an 80-pound drop per cow, though cow numbers were up 4,000. Pennsylvania was up 1.4 percent on a 25 pound gain per cow. Cow numbers were unchanged. Minnesota was up 0.8 percent, on a 35-pound gain per cow offsetting a 5,000 cow loss.

Michigan was up 1.2 percent on a 10 pound gain per cow and 3,000 more cows. New Mexico was up 5.0 percent thanks to 9,000 more cows and a 45-pound gain per cow. Texas was up 5.8 percent, on 21,000 more cows and 30 pounds more per cow. Washington state was up 2.0 percent on a 40-pound gain per cow with cow numbers unchanged from a year ago.

The number of licensed dairies fell to 40,219, down 1600 from 2016. Wisconsin lost 430 farms; New York 160; Minnesota 140, and 30 producers called it quits in California. Idaho lost 10, Michigan lost 60, Pennsylvania 80, and Washington state saw 30 shutter their operations.


Culling higher


Dairy’s weakening bottom line resulted in sharply higher dairy cow culling. The latest Livestock Slaughter report shows an estimated 289,800 head were slaughtered under federal inspection in January, up 42,500 from December and 20,800 above a year ago, up 7.7 percent.


Plenty in storage


The latest Cold Storage report shows Jan. 31 butter stocks grew to 223.9 million pounds, up 55.1 million pounds or 32.6 percent from December and 2.3 million or 1 percent above January 2017.

American type cheese hit 738.2 million pounds, down 8.6 million pounds or 1.2 percent from December but 15.8 million or 2.2 percent above a year ago. The other cheese category totaled 508.5 million pounds, virtually unchanged from December but 14 percent above a year ago.

The total cheese inventory stood at 1.275 billion pounds, down 5.3 million pounds or virtually unchanged from December but 83 million pounds or 6.7 percent above a year ago.


Class I down


The March Federal order Class I base milk price is $13.36 per hundredweight, down 89 cents from February, $3.54 below March 2017, and the lowest Class I since June 2016. The price equates to $1.15 per gallon, down from $1.23 in February and $1.45 a year ago.

The three-month average stands at $14.35, down from $17.03 a year ago and $14.49 in 2016.



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